Bond markets got off to a seasonally typical start this week with volumes and volatility both virtually nonexistent. There are past instances of volatility during the last week of the year, but in general, the default stance is purely neutral (for the traders that are even tuned in).
Technically, we did see some modest gains today, but they fit well within the trading range established when bonds leveled off late last week. Anything between 2.46 and 2.49 fits inside that range. In terms of MBS, Fannie 3.5 coupons traded at 102-10 or 102-11 for most of the day.
The only economic data of note was the Case Shiller Home Price Index. It doesn’t move markets even during busier times of year. It was only notable because it continues to convey better-than-expected home price appreciation.
The Treasury auction cycle technically began today, but 2yr Notes don’t move the markets we care about. Tomorrow’s 5yr Auction is one of the week’s best shots and seeing some movement, if you’re into that sort of thing. In any event, we’d be waiting until January to see movement that matters.